ROI: CRM and ecrm tools for direct marketers

May 13, 2016 | Author: Amy Harrell | Category: N/A
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Chapter 4.4 : ROI: CRM and eCRM tools for direct marketers

Chapter 4.4

ROI: CRM and eCRM tools for direct marketers This chapter includes: J

True CRM and eCRM defined


Key issues: getting CRM right


Business Process Management


CRM tools and solutions for direct marketers


Managing technology for compliance

About this chapter


n 2002 more than 70 per cent of Customer Relationship Management (CRM) implementations failed to meet expectations. Things have improved since then, even though some projects are still failing for one reason or another, but there is still a serious and potentially costly margin of error if CRM is not implemented appropriately to suit a particular organisation. So it still rings true that a ‘one size fits all’ approach to every marketing technology implementation will not work. There is no plug and play CRM solution here. It all requires forethought, research and planning to get it right. CRM implementations should deliver a return on investment (ROI), not just in technological terms. How can you deliver ROI if the customer is not the core focus of your CRM project? There’s more to customer relationship management than just simply technology, and it takes more than a CRM solution to deliver increased sales and better customer relationships. So this chapter explores the issues of people, process and technology, and it suggests that a more old-fashioned approach to CRM is initially the key to creating customer loyalty, acquisition and advocacy. Information communications technology is providing the customer with a widening choice concerning which channels to use to communicate with us. ICTs are also converging; the web and mobile devices are playing a greater role than ever before in terms of the delivery of services and the management of interaction and relationships. So which solutions and strategies can help you to manage this? Therefore the next step is to look at some of the CRM and eCRM solutions available to direct marketers working in organisations of all organisational sizes, to develop and manage more effective customer strategies in today’s multi-channel orld with the assistance of technology.

Author/Consultant: Graham Jarvis

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Chapter 4.4 : ROI: CRM and eCRM tools for direct marketers

Graham Jarvis Editor and Media Services Consultant Media-Insert: Graham Jarvis Media Services Tel: +44 (0)20 8661 8965. Mobile: +44 (0) 776 682 3644 Email: [email protected] Blog: ITToolbox Blog: Graham Jarvis MA is the editor of The Marketing Leaders (, formerly the newsletter of the now rebranded Chartered Institute of Marketing’s Technology group (, of which he was also the editor. goes out each month to around 60,000 subscribers. The subscriber-base of The Marketing Leaders consists of marketers with an interest in using information communications technology (ICT) for marketing. The community argues that Return on Investment-based marketing should be the driver of all implementations of new technology. Further to his detailed research into financial sector CRM in 2002, he also worked as a guest

editor for CMC in 2004, writing CRM case studies and feature articles on performance and evaluation. He continues to contribute to the publication from time to time. He is also currently working with Bloor Research (, writing and researching a report on integrated communications and effective ICT marketing campaigns. He will also be writing a best practice whitepaper on this subject for one of Bloor Research’s partners once the initial report is completed. Graham otherwise researches and writes articles, including case studies, and whitepapers for companies like GOSS, FIRM and ICDL for PR purposes.

Chapter 4.4

ROI: CRM and eCRM tools For direct marketers True CRM and eCRM defined


hen most people talk about customer relationship management, they are referring to CRM as the technology solution that can help to gain a 360degree view of the customer in order to cross-sell and upsell products and services to customers. However, technology is not the real solution to managing customer relationships, particularly considering that 80 per cent of any ICT implementation is about people and processes, and the remaining 20 per cent is about the technology. David Hood, Community Director of The Marketing Leaders believes that CRM includes at least three things: service, the system and the technologies. He also says that CRM excellence comes in that order. So the latest CRM tool will not

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necessarily improve customer service, which other than sales is what it is all about. The financial sector, and some other market sectors too, has had problems with this, particularly with regard to the commoditisation of financial products, which did not in turn encourage long-term customer relationships. The banks’ offerings were too product-centric rather than service– and customer-centric, and not sufficiently focused on customer value and experience. Furthermore, customer relationship management has existed in one form or another since one person first transacted with another. Therefore the modern technology-focused definition of CRM, of which in fact you can find several, is a bit misleading. So avoid thinking that the management of customer, or customer managed relationships is totally revolutionary, and that you can buy a boxed CRM solution which will then almost immediately generate ROI and create more profitable and loyal customers. CRM comes down to marketing basics, while the technology empowers better decision making.

People manage relationships So as highlighted by John Coldwell, Managing Director of InfoQuest’s European research operations, CRM solutions themselves do not manage customer relationships, but people do. Most customers don’t want to be managed, so as direct marketers you can manage the services you provide, the means of communication with your company, the customer experience and the value that a customer receives from any interaction with your company, and this should be in the way that he or she chooses. This will normally be through one or more channels of communication, but not every single one of them. He also suggests this begins with having up-to-date contact data and information about your customers. Without the appropriate data and information it is difficult if not impossible to create or maintain a relationship with your customers, or collate data that can help you to analyse their expectations and add value (e.g. through Customer Value Management – CVM). From a company’s perspective it is also vital to have the right data in order to analyse which customers are the most profitable to the organisation and why. If you get CRM right you will develop a loyal customer who then in turn can become a voluntary ambassador, helping to introduce new customers to your products and services as a result of providing a good experience. One technique that you can use is to place yourself in the position of the customer. Everyone is a customer at one point or another, and so it should be possible to apply this learning from your own experience to an analysis of how customers might react to a particular offering, what constitutes a good experience and how the appropriate emotional connection can be established.

Human sigma The establishment of an emotional connection and rewarding customer experiences, with reference to the principles of AIDA (which effectively means that marketers must attract the customer, create interest and desire before stimulating action), begins with happy and motivated customer-facing employees. They are your greatest CRM tool; not the technology itself! In fact a Gallup Organisation research study – ‘Manage Your Human Sigma’ – of 1,979 business units from 10 major companies showed that if you can manage the variance between customer perception and employee engagement, then it is possible to increase your gross margins by up to 26 per cent. The five largest peers within the study also outperformed their rivals by attaining an 85 per cent increase in sales growth.

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Bryan Foss, an independent researcher, author and advisor of FOSS and Stone Marketing provides his view of CRM: Customer Experience Management (CEM) is more human, more intelligent and more ‘joined up’ than CRM alone. This is what was behind the ‘smart bank’ concept I developed in IBM. Most consumers can see that their banks (and other companies) are not acting smart today – they just don’t apply the knowledge they have ... and it shows! For example, one executive of a major credit card company thought his Platinum customer call centre service was great; however when he had a personal issue with his card he didn’t call the call centre. Instead he called the vice president of the call centre. What does this tell you about the service he is really offering to customers like himself, and about what he subliminally knows about its value? The authors John H. Fleming, Curt Coffman and James K. Harter define Human Sigma as the incorporation and adaptation of six Sigma theories and practices into the non-manufacturing performance management space, where there is an employee and customer interaction. In essence it shows that customer-facing staff need to have the right training, happy experiences and reward-inspired motivations to deliver better customer service, customer motivation to buy, customer loyalty and sales. Furthermore, each company involved with the Human Sigma process used it to establish a benchmark for best practice and to increase their overall commercial and financial performance. Through studying these companies, the authors also discovered that fully engaged customers can quite often deliver a 23 per cent premium over the average customer in terms of share of wallet, profitability, revenue and relationship growth. In a customer service business, for example, while average performance across the entire organisation may reach a specified target, the variation of performance within departments or among geographic regions may be rather large. Measuring employee engagement and reporting at both a high level and a more granular level shows trends that allow you to proactively manage poor performing departments. One way to measure, to gain feedback from customers and employees, would be to frequently use online surveying and reporting tools to encourage feedback and discover any weaknesses. With regard to poorly performing employees, by using online surveying and reporting tools, you could find that all they need is a little bit more training in order to improve their performance. The use of such tools can also accelerate the survey creation and research process, enabling a faster creation of insight and a quicker turnaround when it comes to developing and implementing customerfocused sales and marketing and Human Resources strategies. There are other benefits too, including legal compliance.

Use technology intuitively So technology must be used intuitively to improve the customer experience. Unfortunately Interactive Voice Response (IVR) systems, which are now commonplace in most call and contact centres, don’t always achieve this. They are there to save the company money more than to provide the customer with a good experience, particularly considering that most customers, in spite of the

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development of automated technologies like IVR, would still prefer to speak with an intelligent, charming and helpful human being when they call into a company with a query or even a complaint. Systems like IVR can therefore be used as a barrier, even though they can provide some customer benefits too. The story behind online banking is similar, even though I use it regularly and find it very useful. The drive for greater efficiencies is often one of the key reasons for the implementation of any type of information communications technology, and the danger here is that the customer can be left out of the picture. Let’s also remember that not everyone has access to the internet and so even though it can be a more cost-effective channel from a company’s viewpoint, it isn’t always the right channel for the customer. In fact 36 per cent of all UK households according to the Office of National Statistics don’t have access to the web, and many of them also don’t have access to a computer. Even so, with the proliferation of access to the internet and email at home and at work (in both public and commercial organisations), the development of new service-orientated architectures has increased the number of web services available to customers, helping them to pay and track their utility bills, buy online goods and services, and manage their bank accounts online. From a web-savvy customer’s perspective these services add a measure of convenience, and from a company’s viewpoint they offer the ability to track and measure customer behaviour as part of an eCRM strategy (which should also include customers using mobile technologies). With the development of service-orientated architectures there is a growing trend towards the provision of self-service via the web, within both the public and commercial sectors. In order to attract customers to use a website rather than another channel there must be some incentive to stimulate a visit, and this should be linked with other channels to inspire a call to action as and when new offerings are available to a particular type of customer who has opted in to receive such communications from you.

Remember – technology is a tool, and not the answer, to developing better customer relationships. CRM and eCRM success can only be achieved if direct marketers think outside the box, and develop customer-centric strategies that understand the needs, wants and desires of the customer. So avoid shoehorning the customer into an internal process: there must be some flexibility in the application of technology with the customer at the forefront of your thinking, no matter which tool you use. CRM should indeed enable companies to cross-sell and upsell, and this can be achieved more effectively by including a high level of customer-centricity in everything you do.

Is the customer still king? The problem with the CRM concept though is that it puts customers at the bottom of the pyramid, almost like serfs rather than as kings or queens, with too much focus placed on managing customers rather than listening and connecting with them. Yet, although the customer should always be king, there may be at times a need for marketers to demonstrate some form of leadership. So while the customer is always right, there are instances where some appropriately communicated guidance is also necessary, e.g. the marketing of new ICT innovations, or in a business-to-business consultancy environment.

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CRM is also about managing your ecosystem, which is a concept developed by Harvard Business School A number of the CRM vendors are applying this concept, which suggests that the supplier closest to the customer will profit more by sparking what are called ‘keystone decisions’. The ecosystem includes a number of partners and even competitors whose responsibility is not just to further their own ends in a competitive marketplace, but also to look after the health of the system itself. Microsoft and Wal-Mart are just two success stories of this in practice.

From chains to VANs This is not just about CRM of course, because it also involves effective, and not just efficient, supply and value chain management right from the development of good supplier relationships and inherent value creation, which should then in turn be offered to the customer. This can also provide greater dividends for companies and their shareholders. Microsoft therefore believes that there is a move away from ‘chains’ and towards the creation of value added networks (VANs) in today’s interconnected, increasingly globalised and networked economy. From a CRM buyer’s angle this could involve you buying a solution from Siebel, and then buying other add-on solutions to integrate with it. A consumer example could be that of a customer buying a mobile phone package. He or she might want a Motorola handset, a specific airtime provider and perhaps some very specific applications from a particular provider. The trick here is to provide the flexibility to meet the customer’s needs; to provide a matching and complete solution. If used appropriately, and everything is aligned with the customer, there is no reason why a CRM system cannot help direct marketers to achieve a win-win scenario.

Remember the following about CRM:

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Customer relationships are created by people


Technology is an enabler not the solution


Happy and motivated employees create a competitive advantage through higher levels of performance, provide better customer service and inspire more loyal customers


CRM should deliver value to all stakeholders and ROI

Chapter 4.4 : ROI: CRM and eCRM tools for direct marketers

Figure 4.4.1

The Customer Management Assessment Tool (CMAT)

Developed by Qci Ltd and Ogilvy.

CMAT, which often appears in the books of Professor Merlin Stone and Bryan Foss, shows the interrelationship of the human technological and overall marketing elements of CRM. It demonstrates that CRM goes way beyond simply technology, and therefore in order to get a 360-degree view of the customer, you need to consider all of the constituent parts that are shown in the above diagram as part of your customer relationship strategy.

Key issues: getting CRM right The following suggests some of the questions that any direct marketers and their organisations should ask before selecting, buying and implementing a CRM tool: G

Why do you need a CRM or an eCRM solution?


What is it intended to achieve?


What will be the impact on customer relationships?


How would it improve sales and marketing performance and ROI?


What are the data management requirements?


What is the change management strategy?


Which metrics are appropriate for measuring the ROI?


How will the CRM or eCRM solution integrate with legacy systems?


How will it integrate with other ICT systems?


Do we have the organisational and technical infrastructure in place to manage the CRM solution inhouse?

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Would it be cheaper to subscribe to an on-demand, hosted and managed solution?


How does that compare with an off-the-shelf solution?


What sort of user training will be required?


What will be the impact on the culture of the organisation and its business processes?


What types of CRM tools are required and why?

Warning! There is no point in buying a CRM tool without having a clear understanding of what you expect it to do for your business, and how you are going to make sure that its implementation is successful.

So, as you may need to justify your spend to senior executives and to shareholders, it would be prudent to develop a consultation process inviting the opinions of as many relevant stakeholders as possible to determine what the benefits and expectations will be, looking at the organisation from the inside out and from the outside in. With a clear understanding of your own internal resources and those of your partners, it should be easier to determine which kind of CRM solutions are the best fit for your company, and what type of model it should follow.

Graham Technology’s Chief Marketing Officer, Paul White cites three basic CRM models: G

Campaign management used mainly by sales and marketing people


Operational CRM used with contact centres and particularly with the internet


Analytical CRM – which is often considered to be at the high – enterprise end of the market, but there are a number of solutions on the market that also enable SMEs to undertake a certain level of statistical analysis

Operational CRM is aimed at creating some form of process management in the customer interaction, enabling a call or agent centre agent to build the customer experience. It also requires a significant investment in people, processes and technology. Bill Mooney, GB Group’s DataDivision Sales Director, warns that due to its complexity it has led to a number of high-profile failures or business cases that have been hard to prove. In comparison he says that analytical CRM (aCRM) has a tighter and more defined remit. The outcomes of aCRM are more easily and accurately measurable too. Another version includes all three of these models in an integrated fashion to complement each other as part of a closed loop. You can also take components from each and add them on to an existing CRM solution, and there is nothing wrong with this approach so long as you have your eye on the whole picture, i.e. how it all fits and works together and whether you have the skills and resources to develop it yourself. While some companies might be happy with an off-the-shelf solution, there are a number of advantages to buying a customisable solution that

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is also scaleable, and which will meet the needs of your company and might also be more relevant to your specific vertical market. Although there are a number of perspectives that talk about how to get it right in the context of how to attain a return on investment, Bryan Foss argues for a rapid but considered implementation of a closed loop CRM model, which incorporates all of the above models and considers an integrated multi-channel approach. What you do here is create a thin loop, and then you gradually make the loop thicker by adding products, channels or analytics in stages. If done properly this methodology should generate more ROI than if each of the CRM solution’s models and components were implemented alone.

Data management One of the key challenges that organisations face is how to use both structured and unstructured customer data throughout the organisation to break down the silos between departments such as sales and marketing. So you need to consider how the data will be managed (i.e. at a departmental or corporate centrally managed level); how it will be extracted; who needs to use it to deliver better customer-related decision making, and how this data can be integrated with and exploited by other solutions like Enterprise Content Management systems, data warehouses, Electronic Document Records Management Systems (ERDMS), and those for Sales Force Automation (SFA). Organisations, for example, that integrate CRM with external knowledge bases will benefit from the advantages of sharing knowledge and the individual and organisational ability to improve decision making, and to capture ideas for improved customer-centric strategies and insight. With the exploitation of natural search tools, this should in turn improve customer service, marketing and sales performance across the enterprise. Yet up to now most CRM system implementations have focused solely on internal knowledge base management. Since up to 90 per cent of unstructured data – which might include information about customer interactions, strategies, training materials and product information – is dispersed across most organisations, the next step should be to exploit the full range of Knowledge Management’s capabilities with more of an external, customer-centric focus.

While knowledge management (KM) is becoming an important facet of customer service and for developing what Gartner refers to as the ‘highperformance workplace’, it has also suffered many of the problems that CRM faced in 2002. Imaginatik Research reported during that year that 80 per cent of all knowledge management projects were failing in the US. So, as with CRM, everything should be well thought through in order to avoid costly mistakes down the line, and this should include thinking about how CRM fits into the existing technical infrastructure.

As with KM, you should always ask your staff about what types of data they are working with, and what sort of information they need about the customer. This will determine your data search and retrieval strategy, and it should be possible, if you have a fully customisable CRM solution, to create taxonomies that enable the right information about the customer to be searched for and retrieved quickly, saving time and money. The fast retrieval of information can enhance the decision making process, improve customer services by helping contact centre agents to answer customer queries more efficiently and effectively, and could also assist salespeople to cross-sell and upsell more products.

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When implementing an analytical CRM database keep it separate from the operational platform to allow for the easier integration of external data like demographic profiling. This should also prevent or reduce any compromises and conflicts caused by the competing demands of each system.

The data should also provide a robust single view of the customer, and in a way that is manageable and accessible to the user. If the user interface of the CRM solution is too complicated then opportunities could be lost, and time wasted. Such a solution could also necessitate more training than would otherwise be necessary. It is important to keep the management of the data simple rather than be overly clever about the way that it is presented to customer-facing staff. There should be some form of testing undertaken throughout the implementation process to ensure that it is useable and helps staff to do their jobs better and this should motivate them. This data may emanate from a wide range of sources across the organisation, and these are ever increasing in volume. Data management is therefore one of the key challenges facing most organisations, and it is becoming more and more complex. However, if done correctly it can improve employee and business performance and as a result this can provide a competitive advantage and greater ROI. Nevertheless, customer data is worthless if it has poor integrity, if it is not accurate, unduplicated and kept up to date. Data management is a continuous process, and so there must be some understanding of who is responsible for updating it and how.

A ‘one size fits all’ CRM database may not suit everyone within the organisation, and it could be very difficult, if not impossible, to provide the same data in the same format for each and every department. They may require different formats to extract and use the data in a number of diverse ways, and it can be costly.

Segmentation and analysis Segmentation tools can provide a more accurate picture and assist in the creation of a single view of each customer. However, segmentation is not a perfect science: no matter which type of statistical model you use there will always be a margin of error. So you can have two people within the same socio-demographic group and living in the same street, but this will not necessarily mean that they will drink the same brand of Coke, wine or whatever. So it is therefore essential to capture personal and transactional data about individual customers in order to build up a more accurate picture of them, and then personalise your offerings and communications with them to match their needs.

Graham Technology’s Chief Marketing Officer, Paul White says: A segmentation tool can greatly increase the productivity of contact centre staff. Segmentation is more than just a tool; it is about providing the granularity in which that segmentation can be valuable. My perspective of analytics is where we are trying to spot trends. This is not a campaign management activity; it is a data mining and analytics activity. However, these two can support each other.

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Segmentation after all is a key marketing tool, which can improve targeting and personalisation. In the financial services sector, for example, by using rigorous scorecards it can also be used to manage and analyse risk and assess the value of the customer to the organisation. So it is not just about whether you can crosssell or upsell, it is also about knowing which are your most profitable customers, so that you can target them more effectively and the segmentation process will allow you to uncover and analyse current, historical and probable future customer trends, and improve your marketing strategies. The customer analysis will generally include some consideration of where your customer is located, an analysis based on the customer’s socio-economic category, a market analysis, the rate of sale perhaps according to socio-demographics, buying behaviours and customer satisfaction, churn, acquisition and retention. There are a number of metrics that can be used, but the most important thing is to segment your customers appropriately and ensure you that you are measuring the right things, with a clearly defined objective and purpose. In today’s multi-channel environment where customers’ expectations are much higher, and where there is a wider choice of how they interact with companies, there should always be some channel segmentation and analysis. Segmentation should also be treated with some sensitivity, to avoid targeting a customer with the wrong message, product or service. The channel analysis should consider which channels work best together and deliver the best response rates relating to a particular campaign. With the right segmentation model in place, you will be able to gain a single view of the customer across all touchpoints. Think about how each channel affects the other, and how it also measures up against the campaign objectives. An analysis of the campaign, the customer and the channel, as internal and external factors, can make the difference between aligning your strategies with your customers and failing to connect or understand them and your markets.

Monica Hall, Senior Consultant and Director of ASQ Analytics comments: Any business that has customers with which it hopes to build long lasting and mutually beneficial relationships should be using marketing analytics. This is because not all customers are the same. Marketing strategies can be devised to take account of these differences, but only if you have a good understanding of what these differences are and what they mean to the business. In essence, the main benefit of marketing analytics is that they can help you to maximise your marketing budget, by helping you to focus on the areas that will bring the most benefit. Online analytical processing (OLAP) can be used to track, monitor and analyse online behaviour. The web makes it very easy to track and monitor visitor behaviour such as frequency of visits, clickthrough rates from email and other electronic channels, page impressions, sales and requests for information etc. Firewalls and anti-spyware are the only obstacles that direct marketers face when tracking customer behaviour online. Other metrics could include the number of people who have joined a forum and posted messages, but profit is the only metric that really counts to profit-making organisations, although financial ROI should not be used in isolation.

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Chapter 4.4 : ROI: CRM and eCRM tools for direct marketers

To summarise, the first steps are as follows: G

Understand your business and marketing objectives, because this may determine how you analyse the segmented data


Conduct an audit of existing personal and transactional data, and how it is being captured; examine whether additional data is required, perhaps even from a third party


Decide which data models to use and how they should be structured


Consider which statistical models to use


Which metrics are appropriate to analysing the data?


How is the data going to be used and accessed?


Think about how this relates to the different communication channels

CRM is often considered to be just about cross-selling and upselling to existing customers, but there may be a limit to how many products you can sell to them. It also might be cheaper to focus on an existing customer base, but this should not negate winning new business from new customers who might even be more profitable than existing ones in the long term.

Channel management There are a growing number of different customer data and communication channels, or touchpoints, but generally customers prefer less rather than more channels. They should be able to opt in or opt out of the different channels quite easily. In the financial sector, these could range from the cash machine (ATM), to the web, SMS and the telephone. In the retail sector you will also have data emanating from EPoS systems, loyalty cards such as Nectar and Tesco’s Clubcard or other types of store cards. Web logs and podcasts are also regarded as important CRM tools in their own right for delivering messages and encouraging customer interaction and feedback. So the challenge from a business perspective is how to manage this data across the different channels, and this will quite often include the ability to analyse which channels are the most profitable, the levels of service and customer satisfaction they provide and which are most preferred by your customers. Direct marketing and sales data can provide the relevant information about which channels work well, because they are measurable. Different types of customers will use different types of channels. My report for Bloor Research, which will be published later on in 2006, into effective ICT marketing campaigns shows, for example, that the business-to-business (B2B) space is more likely to use electronic channels. The internet as a delivery mechanism for eCRM, according to Cliff Jenkins of e-Advantage Solutions, is very pervasive and cost-effective. Even so, direct mail plays an important role too. A study by The Direct Mail Information Service (DMIS) discloses that business managers open 70 per cent of direct mail, while in the business-to-consumer space there is a greater choice of communication channels. Overall the number of available channels keeps growing.

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Bill Mooney, GB Group’s DataDivision Sales Director says: GB Group’s research indicates digital communication channels will become even more important to marketers over time. We have therefore developed a digital channel communication platform that allows clients to select and publish campaigns (from within the marketing database) via email, SMS, MMS and voicemail. Consequently, marketing databases will become more complex and technically difficult to manage. Mobile channels, such as mobile phones and PDAs, are an increasingly important part of CRM and they present the biggest opportunity. James McNab, Head of Corporate Affairs at Opera Telecom said last year that mobile marketing will become more important than email. Mobile handsets outnumber personal computers (PCs) by a factor of 10:1, and on January 1st 2005 over 133 million text messages were sent to colleagues, friends and loved ones. It is interesting to note that 94 per cent of text messages are read, and 75 per cent of these are read instantly. The Mobile Data Association also reported that 89 million and rising texts were being sent towards the end of 2005.

Figure 4.4.2

Graham Technology’s view of multi-channel CRM, showing operational CRM in a multi-channel environment.

Source: Graham Technology

Business Process Management (BPM) The implementation of any new technology from an Enterprise Content Management system to a CRM or eCRM solution can be very disruptive to existing working practices, including processes and procedures. An internal audit and consultation process with each of the key stakeholders and users will therefore prevent any backlash against the project. This should examine the existing processes that are in place in terms of technology and people and whether processes can be integrated or certain parts of the organisation have different needs to others in the way that they use the system.

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Although it seems like a cost to the business, other than doing your research before buying a CRM solution, the best way to save money is to make sure that everyone throughout the organisation is supportive, and aware of the implementation of a CRM system. Alan Ferguson, Marketing Strategy Consultant – Head Up Thinking Ltd BPM helps to streamline business processes across the organisation to: G

Enable more efficient working practices to be developed


Increase the performance of your staff


Facilitate access to knowledge, data and information


Establish workflows and procedures


Maximise the levels of customer service


Better manage the supply and value chain

These processes should also begin with the customer, and not just be designed for the benefit of the organisation itself. Good customer service does not come from having a process in which a call comes in from a customer with a query, only to find that two minutes later the call centre agent is politely trying to move on to the next call in order to increase call volumes and meet targets set by a Service Level Agreement. The agent’s performance is then measured according to this, and may be rewarded for good performance even if the customer’s problems were not solved. Unfortunately this is a scenario that you can often find in many call centres. The processes and procedures consequently become more like protective battering rams than facilitators. What customers want is a system that is quick and friendly, and no matter how often technology can be used to automate business processes, there will always be times when customers prefer the human touch and many of us still do. Again this goes back to providing a good customer experience, and the alignment of business processes to both the needs of the organisation and the customers. Customer satisfaction does not come from customers being held in a long queue, and a bad experience of either the people using it or the technology can be damaging to your brand.

Define your CRM processes using BPM mapping tools; define your business rules; integrate people, processes and applications; execute and continually monitor, test and optimise them. Appropriately optimised processes can deliver greater returns on investment.

The approach of the Ion Group is much better, because the company allows its agents to talk to customers as people rather than just numbers, in order to strike up some form of rapport with the aim of creating a long-term relationship. The key differentiator here is that the call centre agents are not pushed to answer customer queries within two minutes and then politely tell the customer to move on. From my interview with its Managing Director, Graham Ede, it is more important for them to answer all of the customers’ queries and leave them feeling valued and satisfied.

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The other approach comparatively leaves the customer out in the cold and quite often they have to call back. This may raise call volumes, but is it the best way to deliver value or to encourage advocacy? Business processes should deliver value to the customer, and not make the customer feel unwelcome. This is down to preponderant obsessions with driving down costs, whereas a focus on generating more profitability and ROI through customer service could prove more beneficial. Costs do need to be controlled, but there is only so much cost-cutting that you can do before affecting the company’s ability to operate effectively and not just efficiently.

BPM is about change management, and the processes are ever changing and developing; they often cut across each other and they must be able to flow between all of the relevant stakeholders and organisations, and they interact with systems using traditional and electronic channels and people. Nothing is static.

From an eCRM perspective business processes will include some thinking about how your customer explores products and services online: from the way the customer navigates the website, to how the transactional and personal data is captured and the order fulfilled to the point of delivery and thereafter. There are also various techniques that can be used to improve the experience that a customer has online. Like any offline activity such processes can be mapped as shown by the following Siebel diagrams to improve workflow:

Figure 4.4.3

An example of a Siebel business process map: Identify the customers, understand their needs and recommend solutions.


 Source: Customer Experience and Sales Effectiveness within the World’s Top 300 Retail Banks, Datamonitor, IBM and Siebel.

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Chapter 4.4 : ROI: CRM and eCRM tools for direct marketers

CRM tools and solutions for direct marketers There is a wide range of CRM tools available to direct marketers, for all types of companies and sizes. Although CRM analytical tools are available to SMEs, they are often perceived as being suited more to companies within the enterprise space. as you see from table 4.4.1 below. On-Demand or Software-as-a Service (SaaS) offerings are mainly favoured by smaller companies with 50 seats or fewer, but there is an increasing uptake for this type of CRM delivery mechanism in the enterprise space. The CRM choices on offer today from Microsoft’s perspective are also shown in figure 4.4.4:

Figure 4.4.4

New choices for CRM today

Source: Microsoft Dynamics.

The five largest CRM players within the market are currently:

4.4 – 16


SAS which invented the Enterprise Resource Planning market on its own, and used this experience to eventually gain a foothold in the CRM space.


SAP, which according to the Customer Management Community Insightexec is the market leader in terms of the number of shipped licences (but apparently not in terms of those that are actually used).


Microsoft which recently launched Version 3 of its CRM suite.


Oracle which has changed the face of the CRM market by buying Peoplesoft and Siebel.


And then there is – the On-Demand innovator. Information Age magazine says it is the most lauded product since SAP R/3.

Chapter 4.4 : ROI: CRM and eCRM tools for direct marketers

On-demand CRM players is responsible for spurring on the much larger players into offering on– demand solutions; an opportunity that they had ignored. Its subscription model means that it is easy to get set up within minutes, and companies only pay for what they use while the larger players are heavily dependent on licence fees. Now a growing 40 per cent of the market is buying ondemand solutions. The larger players, when they finally recognised the opportunities of providing software-as-a-service, were often unable to copy the company’s success. They need to, because the Enterprise market began to dry up in 2004 when most of the banks had completed their CRM implementations. So the focus is now more on offering mid-tier solutions, but there is growing demand from the smaller firms.

Read analyst reports and do your own research in order to assess which tool is the best fit for your company and its customers. It is better and cheaper to discover whether a CRM or eCRM solution will do what you need it to do first before buying it.

Analysts in the US are anticipating that Microsoft will soon join the leading ondemand players such as, Netsuite, and RightNow. If such an offering is created, this could create some channel conflict with its existing partners. Following hints from Bill Gates who sees SaaS as a viable CRM delivery mechanism, the only question is over when this will happen. The company is currently having problems with its new operating system, Vista, and so a hosted Microsoft CRM solution may still be a while away.

Table 4.4.1

On-demand or on-premise?

Delivery model




– No need for expensive infrastructure – Can be quickly deployed: no hardware of software to purchase – No need for a large IT department with skilled staff – Can support the integration with web services – Maintenance and updates are handled by the hosting company – Lower upfront costs and variable pricing – Can be used as a mobile platform for salespeople to log into while in the field – Benefit from economies of scale and access to leading-edge technologies– Ideal for SMEs

– Many on-demand solutions have a limited customisation capability, supporting standard processes – If the hosting company’s server goes down, access to the service could be lost until restored – Doubts have been faced over security, although many of the stability and security concerns of customers either have or are being allayed by the vendors – The long-term costs can be higher than expected as a result of a focus on the lower start up costs (e.g. licence conversion, cancellation fees, integration and customisation etc.).


– Highly customisable – Ideal for companies requiring specialised data structures and processes – Suitable for companies with complex integration requirements – Considered more secure with regard to confidential data – Less costly in the long term – More control over the applications

– Higher upfront costs – Requires a larger number of inhouse IT specialists and resources to manage it – The need to purchase a licence per seat or per CPU – Time and resource consuming to maintain

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Chapter 4.4 : ROI: CRM and eCRM tools for direct marketers’s biggest weakness at the moment concerns questions over support. The company recently faced a problem, which caused a significant amount of downtime. Reports suggest that it has recovered from this incident and the dents caused by many of its customers not being able access their data. Customer concerns over downtime have fallen since last year, while its deployment at the enterprise level of the market continues to increase as the capabilities of on-demand (IBM’s view of this is shown in table 4.4.2) and benefits of’s services gain more recognition. In spite of’s continuing success Nucleus Research sees RightNow and Siebel On-Demand delivering more ROI than Its Scorecard study of the ???? also claims that On-Demand has matured, and that it now offers a wider range of functionalities and deployment levels. Siebel and RightNow are moving it away from customer service and sales support to a wider user base. SAP has also launched its own on-demand solution, which targets companies with more than 100 users.

If you are using On-Demand today, you should keep looking for ways to deliver more value. If you are evaluating CRM on-demand, look beyond the price tag and the flexibility to ensure it will deliver ROI in the long term – or you’d be better off buying a low-cost software package. Nucleus Research, Scorecard, On-Demand CRM Market, May 2005

Table 4.4.2

Business and New business resource development administration

Customer Customer and management sales servicing


– Business and resource planning – Business policies and procedures – External relations

– Segment analysis and planning – Acquisition planning

– Customer portfolio and analysis – Credit policy and planning

– Customer sales – Product and servicing operations planning planning


– Business architecture –Business unit tracking – Audit/ assurance/legal/ compliance

– Product oversight – Campaign management

– Customer behaviour and models – Relationship oversight – Application processing

– Sales/service administration – Case and exception handling

– Product operations oversight

– Product development and deployment – Market research – Product directory– Marketing – Campaign execution

– Credit administration– Relationship management – Collateral handling – Customer profile – Contact and event history

– Authorisations – Transaction consolidation – Transaction capture services – Sales – Dialogue handler – Smart routing

– DDA/check specific processing – Retail lending– Card-specific processing– Card financial capture– Merchant operations

Execute – Business unit administration – Human resource management – Facilities operation and maintenance – Systems development and operations – Fixed asset register – Production assurance (help desk)

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On-demand integration and infrastructure management capabilities Product delivery

Source Booklet Four: Banking for On-Demand Business, the IBM Primer – Infrastructure transformation

Chapter 4.4 : ROI: CRM and eCRM tools for direct marketers

On-premise, off-the-shelf players The Enterprise level players offer a more holistic range of operational, analytical, transactional, management reporting, process automation and campaign management tools than the small niche players. However, there is still a debate going on in the market about whether vertical off-the-self packages are adequate or whether it would be better to develop a fully customisable system inhouse.

Don’t just buy CRM solutions from large brands, unless they meet your business and operational requirements.

Microsoft’s CRM Version 3 is a big improvement on the previous versions, but there are some support concerns: that there are not enough specialists around with adequate knowledge of how to effectively implement the system, and that the company’s partners might be holding it back. It is, though, a more customisable package than ever before. It also integrates with Outlook, Excel and Word, and it can also do the same with other solutions like the financial management solution, Pronto. Although Oracle has swallowed Siebel, according to a comment posted on CMC Insightexec, it is expected that it will take around five years for Oracle to produce a completely new range of solutions based upon Oracle’s own tools. Oracle is likely to maintain Siebel’s incentive compensation module, but there are questions about whether it will maintain the high levels of service quality of software maintenance that was enjoyed before the takeover. It also owns Peoplesoft. Some analysts comment that all roads lead to Siebel, with Oracle’s e-Business suites and Peoplesoft’s applications being perceived as end-of-the-line products. It continues to support existing Peoplesoft customers for the time being, but it is generally felt that there is no value for new customers in buying its existing portfolio of solutions. Analysts also feel that the gradual rollout of Fusion will impact upon the viability of buying Oracle’s solutions. However, it is one of the biggest vendors in the market with a good track record of offering a wide range of high-level database management solutions. Sage is intending to release its integrated Sage 1000 software suite in May 2006. This will include both ERP and CRM functionality for medium-sized businesses. The target market for this product is companies with a turnover of between £10 million and £500 million. It will help them to manage business processes right across the enterprise, says CMC It is a generic package, which will also provide accounting, sales campaign management and operations management applications. Although generic, there will be additional software modules that can be added to suit more bespoke functions. The applications can also log enquiries and manage service-based targets.

Open-source alternatives There are always open-source alternatives, such as that of SugarCRM and OpenCRM, which has teamed up with Microsoft. Developing software inhouse, whether that be adapting an existing off-the-shelf system or an open-source one, can be costly. The advantage of open-source is that there is no costly ‘per seat’ or per CPU licensing regime, but this still requires the employment of IT opensource specialists and consultants to ensure the success of such a project.

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Chapter 4.4 : ROI: CRM and eCRM tools for direct marketers

Make sure that your chosen CRM solution is customisable and scaleable, although some vendors offer a range of standard off-the-shelf vertical market processes. It is always an idea to have the ability to add more later on.

Boots Wellbeing: Customer knowledge driven to mySAP

Boots Wellbeing – a joint venture between Boots company plc and Granada Media plc – sought a combination of integrated CRM, retail and business intelligence solutions in order to drive its new e-business venture. The key requirements were to have the ability to run its daily operations from managing its financials, product purchasing and management, and merchandise planning with mySAP Retail, and the analytical data warehouse component of the mySAP Business Intelligence to analyse customers, profitability and sales. They also needed a campaign management CRM system (mySAP CRM) to segment its customer database of 350,000 people in order to have the ability to email them on a regular basis. The combination of the three with the support of SAP proved successful to the extent that Boots Wellbeing says that it is now closer to its customers. The company can now see what customers are purchasing, and therefore recommend offers to particular customers based upon their interactions and historical purchases. It also didn’t take long to deploy, within only 12 weeks for the launch of its Web Store. The implementation was enhanced with the application of best practices such as descriptions of major e-business processes to assist users in capitalising on web-driven business opportunities and reduce or eliminate risk. These were ‘out of the box’ processes for inventory management, pricing, promotions, stock control, purchase order management and related financial transactions. During its first Christmas period the company shipped 64,000 orders to customers and the number of capture customer registrations went up by 350,000 in its customer base. Source: SAP, Boots Wellbeing Combines mySAP Retail, mySAP BI, mySAP CRM for website driven by customer knowledge.

Small and niche CRM players Other than and the other on-demand vendors, there are a number of niche players, often small, that give metrics just as much attention as those within the Enterprise space. Their target markets range from the SMEs to the corporates, but most of the focus remains with the middle-tier range of 150 seats. Small firms have an advantage over bigger names in that they are more agile, and so they can better adapt their products to meet the needs of particular clients at various data points of their vertical markets. Yet some of the smaller vendors tend not to be so proficient when it comes to integrating solutions from other vendors.

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Chapter 4.4 : ROI: CRM and eCRM tools for direct marketers

Small firms present a greater risk, so consider their financial viability for long-term investment security.

Graham Technology, for example, works with Operational CRM for call and contact centre management, which provides its clients with a certain amount of processes and functionalities and then works with them to provide a more customised solution to suit the client’s company and their type of market. The GTX solution is multi-channel, enabling the customer to decide which channels to use to communicate with the call centre, and to change to receive communications via other channels too. GT also offers a Sales Force Automation and a campaign management suite. GB Group, which works with Laura Ashley in the retail sector, uses an Alterian platform and modules to deliver multi-channel analytical CRM solutions within a managed service environment for campaign management, analytical reporting and statistical modelling. Clients have a wide range of options available to them, including: G

Input into campaign selection and publishing


Response analysis


An analytical front-end for campaign selections


GB Group has also developed a wide range of statistical models for clients like RFM, activity sequencing, best next action, and lapse prediction

During my research the other vendors that were recommended were: G

E-Advantage Solutions


G – an integrated sales-lead generation tool


E1Metism which is a customised version of SalesLogix – a mid-sized CRM software that provides closed-loop e-marketing.

For SMEs in particular, one of the decisive factors is the speed with which a solution can be implemented. Enterprise solutions can take years to fully implement and Graham Technology has seen companies two years down the line still where they were when the project started. So a competitive advantage could be gained with the fast implementation of a CRM solution, so long as the process is complete with forethought and planning. Rabobank maximises customer value with IBM

Rabobank is a Holland-based financial group, and it is owned by 328 local banks. It operates as a co-operative with 1.3 million members who provide financial products and services to the country’s retail and business markets. As the market leader it has a customer base of around ten million businesses and private customers. It also has 222 offices outside the Netherlands in 34 countries. According to IBM, Rabobank is also Europe’s largest internet bank.

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Chapter 4.4 : ROI: CRM and eCRM tools for direct marketers

The success of its online banking has led to a reduction in the number of visitors to its branches, and as a result the bank’s employees have found it more difficult to relate to its customers, understand them, interact with them, and offer them the relevant products. So the bank called in IBM Business Consulting Services to create and implement a CRM strategy. The strategy aimed to capture the benefits of the multi-channel environment in which the bank works in order to deliver customer value. By making the customer and product data more easily available, it helped the bank’s employees to identify individual customer requirements, to permit the staff to sell the bank’s financial products and services more effectively, and also to follow them through. The project required sponsorship from senior executives, and the delivery of measurable outcomes. IBM recommended a Siebel CRM system based upon an IBM technological platform, which simplified data entry procedures. This supported the main customer-focused programs. Cohen Brown and FAST sales methodologies were also implemented to enhance the performance of its sales teams. The result is that sales staff can see on one screen all of the products and financial opportunities that can be offered to the customer. Source: IBM, On-Demand Business, Rabobank Maximises The Value of Its Customer Relationship in Close Co-operation with IBM

Managing technology for compliance Not only do customers demand that companies show a high degree of social responsibility during their business dealings, but ever since the Enron and Worldcom scandals there has also been an increasing legal and regulatory pressure. It is therefore a prerequisite to buy and implement a CRM and eCRM system that enables you to comply with the following: G

The Data Protection Act – make sure your system can allow customers to opt in and out, and permit them to decide how they would like you to communicate with them. An automated message can be emailed to the customer to confirm his or her request, and the same applies to any interaction that the customer has with your firm. (For more on this Act, see chapter 12.1.


The Sarbanes-Oxley Act – is very pertinent if you are working with US corporations. It is mainly concerned with financial accounting and auditing issues, but it has wide-ranging implications for company-wide activities from marketing to IT processes, procedures and practices.


Basel II – is the European version of the Sarbanes-Oxley Act, and it covers very much the same provisions.


The Disability Discrimination Act – any eCRM activity should achieve a reasonable level of accessibility compliance based upon the Web Accessibility Initiative guidelines, particularly website and even physical locations.

In order to prove compliance it is essential for firms to develop an audit trail throughout the organisation, and this includes interactions with customers and suppliers, as well as between different departments such as accounts for financial auditing purposes. Most CRM systems should help you with compliance, but it is

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Chapter 4.4 : ROI: CRM and eCRM tools for direct marketers

also wise to ask a few questions about how this is achieved by a particular system, such as: G

Business management reporting


Business process alignment


Data security, storage and business continuity

The following case study shows how the application of Microsoft’s CRM helped the UK’s Department for Education and Skills (DfES) to comply with the government’s Gershon Agenda, which is relevant to all public sector bodies and aims to drive forward e-government policy and practice through the creation of efficiencies and compliance to benefit the citizen. CRM is just as important to the public sector as it is to its commercial counterpart, and the government’s agenda is driving the delivery of web services: the Dorsetforyou and North Cornwall District Council web portals are just two examples. Customer-centric government with Microsoft CRM

The UK’s Department for Education and Skill (DfES) required a solution that would enable better knowledge sharing with its external partners and internal customers. It therefore recruited the help of Capgemini to implement Microsoft-based CRM solutions as part of a pilot project with the Corporate Services and Development Directorate (CSDD). The department works with a number of partners, including nondepartmental government bodies (NDGBs) in relation to education policy development, and a number of other related issues including funding. So it needed a solution that would meet the guidelines and the initiatives of the government like the Gershon public sector efficiency agenda. So in order to address real business issues, the DfES had to develop its IT infrastructure as part of an efficiency drive. This included a system that would support customer-facing workers, simplify administrative procedures and cut down on back office functions. With efficiency being a key component of the project, costs needed to be rigorously controlled. The drive to improve internal and external customer relationships also demanded a system that would make business and customer information more accessible, comparable and up to date. This would create a better understanding of customers and partner interactions, enabling users to share information with each other and learn from one another. Senior managers also sought the ability to report and compare management information across their areas of responsibility. The department also realised that it must maximise the value from its IT investments, so it had to be future-proof and cost effective. It also considered its existing technology and wanted the capability of being able to rationalise it and reuse it whenever necessary for the benefit of its 5,000 users. The CSDD is therefore run as an enterprise type of organisation, and the IT department there is run accordingly. So it needed an enterprise CRM solution to meet its requirements. In order to ensure the success of this pilot project the DfES tested it within the CSDD and the sponsor teams before rolling it out to other groups. The department selected Microsoft CRM because of its ability to be readily integrated with its existing systems and solutions. It can also be easily maintained and adapted by in-house IT teams. Microsoft claims that as an

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Chapter 4.4 : ROI: CRM and eCRM tools for direct marketers

‘out of the box’ solution this also offers low upfront costs, and that it is also customisable to meet the needs of different user groups, and therefore this reduces any need for bespoke software development. Capgemini first delivered the solution in 2004 for twenty users, and was due for a review in December 2005 with the number of users growing to around 54 members of staff. A wider rollout is expected as time goes on. The consultancy firm claims that the implementation of Microsoft CRM was ‘fairly straightforward’. Their clients were able to access Microsoft CRM by installing Internet Explorer 6, Service Pack 1 onto their desktop computers as well as Active Directory integration. Both the CRM and SQL Server solutions were installed upon one server, which ran on the Windows 2000 operating system. A CRM email exchange router provided an interface between the CRM system and Microsoft Exchange Server 2000 or 2003, and this was installed on a machine running one of these operating systems. This is considered to be a flexible solution that will enable the DfES to keep a control on costs, and the CRM architecture is fully scaleable and customised, including the in-house flow of data, and it is broken down into four layers. To improve information sharing the CRM solution was integrated with the Plumtree PrismPlus technology, which is used by the DfES’ intranet, and with a SAOP-based interface and the development of ‘portal gadgets’ to provide the capability of web service application programming. A reusable middle tier was therefore developed, and a traditional three-tier approach adopted: presentation, business logic and data access platform layers. The system enables the sharing of actions through workflow, allowing different constituent parts of the organisation to share and access information. It also allows account managers to record and maintain all details of their interactions with their partners from issues and contacts to appointment and emails. It also has improved their ability to make decisions, to search and analyse data. This means that they now have access to better knowledge about their partner relationships, leading to more effective and efficient account management with respect all of their customers. Source: Microsoft Dynamics, CRM Pilot Enables Better Relationship Management for UK Government.

Further reading

4.4 – 24


Managing the Customer Experience: Turning Customers into Advocates, Joe Wheeler, Shaun Smith, Financial Times Prentice Hall, October 2002.


Consumer Insight: How to Use Data and Market Research to Get Closer to Your Customer, Merlin Stone, et al, Kogan Page, October 2004.


Manage Your Human Sigma, John H. Fleming, Curt Coffman and James K. Harter, Gallup Organisation.

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